IT-business alignment in the digital age

Three years ago, Bill Martin stepped into the CIO role at AEG Worldwide, a sports and live entertainment company, inheriting what he saw as an outdated IT model that lacked alignment with AEG’s vision. After consulting with senior leadership about its business needs, Martin received approval for a new, multiyear IT strategy featuring a revamped IT model that directly supports AEG’s essential IT and business functions.

A key part of AEG’s IT transformation was migrating all business applications — even a proprietary event management application — to the cloud and effectively eliminating the data center. Now, the technology and operations group is focused on integration and cloud architecture. “It’s actually freed up resources to be more committed to delivering those digital services to the business, versus being focused on keeping things running,” Martin says.

Indeed, IDC research shows that many line-of-business executives are looking to IT, and their company’s CIO, for leadership on digital initiatives. In a recent IDC survey, 32 percent of line-of-business respondents said IT could best contribute to their organization’s digital transformation by helping to identify parts of the enterprise to transform using technology. Clearly, IT has a critical role to play, but to be successful IT leaders must ensure that the IT organization, along with the business, buys in to the new model.

At AEG, Martin made the case for the new IT model by walking his staff through the same presentation and numbers that he’d given to the company’s executives. Once they understood the vision, they were “hungry to modernize what they saw as a very old approach to IT,” he says. “The new approach was immediately embraced, and we haven’t looked back.”

Reorganizing for better alignment

In October 2017, when Trish Torizzo joined educational publisher Houghton Mifflin Harcourt as CIO, she found herself in a situation similar to the one Martin faced: IT’s operating model was not in line with the company’s structure. For example, a finance employee asking about the status of an IT development project would go to one IT staffer, but a finance employee asking why the accounts payable report was stuck had to go to a different IT person, Torizzo says. Trying to draw lines connecting the IT groups with the business groups “looked like a big ball of spaghetti,” she says.

Torizzo revamped IT’s operating model to align it with corporate functions like marketing and finance and its lines of business. She says the IT reorganization “creates a structure that has business-facing functions for business alignment and accountability, plus an IT global shared service layer” for IT services such as ERP that span multiple business functions. The new IT model began with “a listening and learning tour,” Torizzo says. This included holding meetings with customer service representatives, walking through distribution centers, and asking engineers about the tools they use.

Finding your focus

The most effective enterprise IT models are tightly aligned with business outcomes that improve the enterprise’s overall competitiveness, according to IDC research. CIOs and IT organizations that understand, enable, support and measure desired outcomes gain a reputation as allies among their line-of-business colleagues, according to our research.

Taking the following steps will help ensure that IT’s contributions are aligned with enterprise needs:

Consult with business functions and C-suite peers to understand business strategies, pain points, workflows and metrics.

Develop an IT operating model that reduces the number of IT touch points and encourages IT and the business to co-create solutions to business problems.

Make sure that the IT organization supports the new approach and that all team members are held accountable with shared metrics and goals.

Ultimately, the focus for IT’s new operating model is to help the business meet its goals faster, says AEG’s Martin. “It’s not about partnering with the business; it’s about accelerating the business,” he says, “bringing a new set of services that helps the business to be even more productive than it otherwise would be.”